Composite Insurer, Niger Insurance Plc swung to a profit in 2018 from a loss earlier, helped by cost reduction that helped strengthen underwriting capacity.
The company reported profit after tax of N593.80 million for the year ended December 2018 from a loss of N978.92 million a year earlier.
While net premium income reduced by 7.51 percent, the company’s combined ratio- a measure of underwriting profitability- improved to 96.23 percent in the period under review from 129.59 percent as at December 2018- A ratio below 100 percent indicates underwriting profit.
The impressive performance can be largely attributed to a cost control mechanism implemented by management and board of directors, while underwriting profit surged by 155.13 percent to N2.81 billion in December 2018.
Niger Insurance’s loss ratio fell to 27.61 percent in December 2018 from 31.61 percent the previous year, which means it spent less on claims expenses in generating each unit of premium income.
Claims expenses were down to 59 percent to N1.32 billion in December 2018 from N3.22 billion as at December 2017, amid a high claims environment.
The composite insurer’s management’s management expenses were flat at N2.57 billion, but it spent more on operating expenses in generating each unit of revenue.
Insurers in Africa’s largest economy are grappling with huge claims brought in by inflationary pressures, which results in underwriting losses, while weak premium income makes it difficult for firms to absorb such loses.
In 2018, total industry claims were in excess of N160 billion from s total premium of N400 billion, a 14.30 percent increase over 2017 claims figure of N140 billion.
Niger Insurance has a shortfall of N9.34 billion, which is difference between the N18 billion minimum capitals set by the regulator, and the company’s shareholders’ fund.
